Automotive retail sales have had a slow start this year, with new-vehicle retail sales expected to dip 4.9 per cent to 2,944,200 units in Q1 compared to a year ago, according to J.D. Power.
New vehicle sales in March are predicted to decline 3.4 per cent to 1,195,000 units year-over-year, with the seasonally adjusted annualized rate (SAAR) for retail sales hovering around 13.0 million units — down 400,000 YOY.
In terms of total sales in March, J.D. Power said they are projected to reach 1,562,800 units, which represents a 2.1 per cent decrease YOY. The seasonally adjusted annualized rate (SAAR) for retail sales is anticipated to sit at 16.9 million units, a 400,000 decrease from a year ago.
“This is the first time in six years that Q1 sales will fall short of 3 million units,” said Thomas King, Senior Vice President, Data and Analytics Division, J.D. Power. “While the volume story could be better, there is remarkable growth in transaction prices, with records being set monthly. New-vehicle prices are on pace to reach $33,319 in Q1 — the highest ever for the first quarter — and it’s more than $1,000 higher than last year.”
King said the combination of lower volumes and higher prices means consumer spending on new cars will only decline by 3 per cent. The increase in transaction prices is related to a variety of factors, and it is being pushed by “the severe contraction of industry sales at lower price points.”
“As manufacturers look towards the rest of the year, the direction from the U.S. Federal Reserve to keep rates stable in 2019 will help alleviate concerns over vehicle affordability,” said King. “While the first quarter has exhibited more weakness than expected, there is still enough time to recover some of the lost volume.”
In Q1 of 2018, vehicle sales were down nearly 3 per cent. Sales during the remainder of the year only dipped 2 per cent. King said the recovery of that volume is key, since the slow start in Q1 has led to higher inventory levels. “Without a recovery, the industry will be faced with the tough choice of either increasing incentive levels or cutting production.”
